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Apple Holds The Fate Of The Market

Bruce Carlson profile picture
Bruce Carlson


  • Large Cap Tech is breaking down.
  • Apple is at a critical juncture.
  • If Apple breaks through current support, it is likely to bring the entire market with it.

Large Cap Tech is currently breaking down - see my previous articles: The Crash is Starting - Now! and Tech is Breaking Down. As this sector has been the driver of the market this has massive repercussions. Given the high historical valuations, the Fed tightening, and the stalling of the GOP legislative agenda (tax cut potential), tech is likely the canary in the coal mine for a much larger equity decline.

Mondays market action, even on light volume, supported my technical analysis as Tech (Nasdaq 100, QQQ) started higher on the day and then retreated and closed at a new low. This reinforced the current technical setup as the Nasdaq 100 has completed a head and shoulders top, broke through it's 50 day moving average and has just retested those breakdown levels from the downside and failed. Even as the Dow made new highs, tech confirmed it's weakness.

Nasdaq 100, QQQ

Apple (AAPL) as the biggest component of the Nasdaq 100 at 11.6% and the S&P at 3.6% holds an outsized impact on the market direction. When we look at it's chart it looks to be breaking down, but has not yet confirmed that pattern yet. It currently rests at critical support levels, with any further decline confirming it's head and shoulders top.

AAPLIf Apple (AAPL) breaks the trendline at 143 it completes the head and shoulders pattern and the measured move implies a move down to 130. However with a move down like that, it would most likely continue and fill the breakaway gap at the 121-126 level and largely erase the entire year to date gains. A move down to 121 would represent a further 15% decline from current levels, and while seems like a severe move, simply represents the gains from February.

While Apple (AAPL) still has strong business

This article was written by

Bruce Carlson profile picture
Former Pension Fund Manager and Derivative Expert for Top Tier Bank

Analyst’s Disclosure: I am/we are long QID. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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